NEW DELHI—The coronavirus pandemic has strangled one of the most powerful engines of economic growth in the world: spending by India’s 1.3 billion consumers.
The country’s gross domestic product shrank 7.5% last quarter compared with a year earlier, India said Friday, as Covid-19 has transformed the world’s fastest-growing economy into one that is now among those contracting the fastest.
With more than 9.3 million people infected and 135,000 killed by the virus, India has been hard hit by the pandemic. Even after the nation started ending its lockdown in stages in May, people have been staying home, conserving their rupees and riding out the storm.
The latest GDP data marked the first time in decades that the country’s growth has contracted for two consecutive quarters. Private consumption, which makes up more than half of the country’s GDP, fell 11% during the quarter from a year earlier. Government spending, which made up about 11% of GDP during the period, was down 22%. Capital expenditures fell 7%.
By contrast, in the most recent quarter, the U.S. economy contracted 2.9% year-over-year, while China’s economy grew 4.9%, according to the latest tally from the Organization for Economic Cooperation and Development.
